Facebook's Millions Of Lost Users Highlight Our Bizarro Economy

James Poulos
, ContributorPolitical theory and strategy that works for American humansOpinions expressed by Forbes Contributors are their own.

Peak Friend?

Though there's some reason to be cautious, initial reports suggest that
Facebook is on track to shed huge numbers of users this year. As The Huffington Post explains, "according to the social media analytics firm cited in the story, the statistics are merely 'rough estimates'" -- "not primarily intended for journalists, but rather [as] ad estimates for marketers." Nevertheless, the figures, revealed by The Guardian, are too striking to brush aside:

In the last month, the world's largest social network has lost 6m US visitors, a 4% fall, according to analysis firm SocialBakers. In the UK, 1.4m fewer users checked in last month, a fall of 4.5%. The declines are sustained. In the last six months, Facebook has lost nearly 9m monthly visitors in the US and 2m in the UK.

So what gives?

"The problem is that, in the US and UK, most people who want to sign up for Facebook have already done it," said new media specialist Ian Maude at Enders Analysis. "There is a boredom factor where people like to try something new. Is Facebook going to go the way of Myspace? The risk is relatively small, but that is not to say it isn't there."

Actually, the more intriguing possibility is that Facebook doesn't need to worry about peaking, much in the same way that, say, Pepsi doesn't need to worry much about coming in #2 to Coke. At a certain size, locked into a large enough market share, even great tides of user gain and loss can matter relatively little.

That's why I'm more interested in focusing on the market behavior a dominant Facebook of any size permits -- and less interested in forecasting or soothsaying. One way of wrapping our minds around today's economic landscape is to consider that our two main sectors of growth are very -- even fundamentally -- different. Think of social tech on the one hand and health care on the other. Respectively, these sectors, and the array of subsectors and industries surrounding, fueling, and benefiting from them, offer society's just about most and least optional baskets of goods and services.

The exit options available to a Facebook user abound. The exit options available to, say, a Blue Cross/Blue Shield user do not. It's relatively easy and cheap to do without any given app or social media platform. It's relatively difficult and costly (at least eventually) to drop out of the health care system.

Cartel-like arrangements in the social tech space, therefore, have a much different impact on market behavior than a similarly-structured health care space. Even if churn typifies both, exit tends to be squeezed out of the latter, whereas in the former it becomes a key feature of the system itself. It's an open question which kind of setup compounds more systemic risk (though I have my suspicions).

Yet the full bizarro quality of our economy doesn't come into full focus until we consider, as well, how much empty space there seems to be between the easy-exit and the hard-exit poles of economic activity. In the middle range of activity, we should find a host of goods and services that are neither essential nor inessential -- moderately useful stuff with a moderate impact on our lives, stuff that affords us a moderate degree of influence over our own lives and those of others. Fortunately, these sorts of things do abound in our economy. But they're not seen as sectors with as much dominant influence over the character of the whole economy as the social tech pole and the health care pole.

As a result, we're getting a distorted glimpse at a distorted economy. Our two power poles really do cultivate extreme market behavior, as people struggle to navigate fairly cornered or cartelized markets for the most inessential and the most essential goods and services. It's crazy to have an economy characterized by a mass chase for super-low-stakes and super-high-stakes goods and services, but that's what we've got. And because the sectors offering those goods and services are the ones that seem to be in commanding economic positions, our impression of their effect on us is magnified, intensifying the bizarreness.

Viewed in this way, the appeal of the Kotkin-Bush turn toward "traditional" industries as a way to amp up population growth and economic growth is rooted less in a nostalgic or risk-averse hope that we can 'turn the clock back' on the political economy -- and more in a present-minded, risk-tolerant interest in rebalancing our economic center of gravity around moderation: moderate stakes, moderate utility, moderate impact, moderate value. All these things are components of moderate lives -- lives lived in the middle realm between what's trivial and what's literally a matter of life and death.

Most intriguingly of all, the implicit promise of the Kotkin-Bush economy is the same one woven into the allegedly antagonistic Hipster-Urban economy: that open-ended lives full of unpredictable, transformational relationships can readily take place well within the bounds of that middle realm. In the meeting of these two models, we might finally find a way out of economic bizarro world -- and back to reality.